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Iron and Steel Industry

Part of Orders of the Day — King's Speech – in the House of Commons at 12:00 am on 9th March 1950.

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Photo of Mr Oliver Lyttelton Mr Oliver Lyttelton , Aldershot 12:00 am, 9th March 1950

I beg to move, as an Amendment to the Address, at the end, to add: but humbly regret that the Gracious Speech contains no reference to the future of the Iron and Steel Industry and that in a time of rising world competition this vital industry will be kept in a state of anxiety and suspense. My right hon. Friend the Leader of the Opposition, during his speech last Tuesday, made the object of this Amendment quite clear, but I think it necessary that I should restate it so that there shall be no doubt. We have put it down in order to secure from the Government a promise that they will not make the vesting date under the Iron and Steel Act earlier than nine months after the next General Election, or some equivalent undertaking. For better or for worse, the Amendment does not raise any question of repealing or tearing up the Act. It is put down so that we may seek assurances that the operation of the Act will be subject to delay.

The Amendment is drawn in terms which, I think, would enable me to range widely over the whole topic. Let me hasten to assure the House, however, and more especially those Members who were in the last Parliament, that I have no intention this afternoon of deploying a general argument on the subject of the nationalisation of the iron and steel industry. Though it is quite true that on some particular matters we had not full enough discussions because of lack of time, the general case has by now been so often ventilated, and, in my opinion, the poverty of the argument in favour of the nationalisation of the iron and steel industry so frequently exposed in all its nakedness, that any attempt on my part to re-open the broad question would be outside the purpose of the remarks which I wish to address to the House.

There is one thing to which I wish to refer before I come to my argument. I noticed that the "Daily Herald" of last Tuesday had a headline right across the front page: Tories Start Steel Rumpus. Now, as so often happens in the case of quotations from the "Daily Herald," the facts are entirely different. On Monday my right hon. Friend the Member for Warwick and Leamington (Mr. Eden) asked the Government their intention over the Iron and Steel Act. He did it in the most conciliatory speech, and this Amendment has been put down owing to the curt and unsympathetic answer which his inquiries elicited from the Prime Minister. On that particular aspect I shall have more to say later. If there is to be a rumpus—and personally I rather enjoy rumpi—it has been started by others. On this occasion I have no desire whatever to barge into this controversy like a Bevan in a china shop.

We all know that the positions taken up by the Government and by ourselves on the merits of this case are entirely contrary; we are fairly and squarely opposed. We on this side remain committed to repealing the Iron and Steel Act. Our opinion also stands quite unshaken—and I think unshakeable, whether the Government agree with it or not—that the country has recently given a clear answer that it does not wish at this moment to proceed any further with the nationalisation of any industry.

Indeed, the Government appear to acknowledge this clear decision with regard to all schemes of nationalisation except the one of iron and steel, which we are debating this afternoon, because in the Gracious Speech no mention is made of cement, sugar, insurance or chemicals. They accept this clear decision with regard to all their schemes of nationalisation except the most important of all, this one of iron and steel. Of course, over iron and steel I quite easily see their difficulty. Just as we are committed to repealing the Act, so are they committed, if they are given the life to do it, to seeing that that Act is put into force. Let me add this, however.

Suppose that we had not put down this Amendment, which, I repeat, is designed to elicit a sympathetic reply from the Government regarding the vesting date. Every day that Parliament lasted, and every day that the Government remained in power, would have brought nearer the inevitable clash, the inevitable "steel rumpus." We should have been bound to claim, as 1st January, 1951, approached, that no Government depending upon so exiguous a majority had any right to put into force an Act so far reaching that it would once and for all put an end to private enterprise. I think everyone will agree that I am not overstating the case in saying that.

But do not let the Government underrate the forces which would come to our aid, and which, I may say, have come to our aid over this very matter. We are very glad, if the Press reports are correct, to know that the Liberal Party are in sympathy with the objects of this Amendment. [Laughter.] I see no particular reason to think that to be funny. When we know we are supported by the independent judgment of an independent party, it reinforces our view that what we are asking for is entirely sensible and reasonable. The position they foresaw during the election has, on this occasion, almost exactly come about. On the eve of the poll, they issued this statement: If the Socialists emerge from the poll so that they are unable to form a Government without Liberal support, it should be borne in mind that the Liberals have already pledged themselves that there should be a halt to nationalisation for at least the next five years, and that it would therefore be necessary for the Socialists to undertake to suspend indefinitely the Iron and Steel Act when they ask for Liberal support. We are not asking, at the moment, for an indefinite suspension. We are asking only that the vesting date should be deferred until nine months after the next General Election.

We feel, and feel most strongly, that the House of Lords have fulfilled an invaluable function in obliging the Government to seek an electoral mandate before this Act came into force. It would be against the very spirit of the Constitution if delay, having been secured by the operation of constitutional machinery, and the people having been asked to pronounce upon this very subject of nationalisation—and the people, to put it no higher than this, having given a very uncertain answer—this Measure were persisted in as if there had been no appeal to the electorate. If our Amendment is accepted no clash upon principles will have taken place and the Government will, I think, have acted with constitutional propriety.

Let me turn now to the statements made in the House this week and how they affect the problem. I referred to the Prime Minister's statement upon iron and steel as curt and unsympathetic. I do not disguise from the House my belief that there are many statements he could have made which would have prevented this Debate taking place. But he did not choose that course. He used these words: That Act is on the Statute Book. The Corporation cannot be appointed until 1st October, 1950. The earliest date for vesting is 1st January, 1951. There is nothing to be done in the matter immediately, but that Statute is on the Statute Book and our purpose is to give effect to Acts passed by Parliament." —(OFFICIAL REPORT, 6th March, 1950; Vol. 472, c. 66.] There is the small point that the Act differs slightly from the Prime Minister's words. He said that the Minister cannot appoint the members until 1st October. In one sense, of course, that is correct, but the Act actually says "before," and I think the word "until" is less permissive and more mandatory than before. However, as I say, that is a small point.

So much for the first appointed day under the Act. Much more important than this date is the vesting date, which is the date upon which the securities of the privately-owned steel companies, covered by the Third Schedule of the Act, pass into the ownership of the Corporation. Again, the layman might think that the Government had the definite intention of taking possession of the various properties as going concerns on 1st January, 1951, but that too remains at least uncertain, since the Act allows the Minister great latitude and permits him to delay the vesting date for no less than 12 months. I think that I had better quote the Statute. With regard to the appointment of the Corporation, it says The Minister shall not appoint any member of the Corporation before the first day of October, nineteen hundred and fifty. The part relating to the vesting date states: Subject to the provisions of this Part of the Act, all securities of the companies specified in the Third Schedule of this Act shall on the first day of January, nineteen hundred and fifty-one, or such date later "— These are the words I am referring to— but no more than twelve months later, than the date aforesaid, as the Minister may by order substitute for the date aforesaid, vest in the Corporation by virtue of this Act, free of all trust and encumberances. Therefore, when the Prime Minister stated that it was the intention and purpose of the Government to see that the Act which is upon the Statute Book was carried out, he was talking about something indefinite and imprecise in point of time. Perhaps it would be more correct to say that the difference in point of time between the earliest date that the Act could become operative and the latest date is no less than 12 months, and that if the full delays allowed for in the Act were taken advantage of by the Government, then the present Act would not become operative and the securities would not change ownership until 1st January, 1952.

If we on this side of the House knew that the full latitude was to be used and the appropriate delays were to be taken advantage of by the Government, then this Debate would have been unnecessary, or at least premature. The object of our Amendment is to try to clarify the Government's intentions. We did not and do not expect them to concede their advocacy of the nationalisation of iron and steel, however absurd we may think the arguments to be. They are too far cornmitted to their point of view.

However, we seek to do three things. First of all to give the House as much elbow room over its immediate legislative programme in the voting of supplies and the carrying on of the King's business as we reasonably can. Secondly, we seek to give the steel industry, during this vital period of its development and expanding production, as long a run, if I may use the phrase, as possible without the interruption and dislocation which all parties will agree must attend the act or process of nationalisation. Thirdly, we wish to allow the best appointments to be made to the Corporation, if, in fact it ever comes into being. Let me address myself to these three points.

If we concede that it is asking too much of the Government to abandon nationalisation altogether, they must, in fairness, concede to us that it is equally impossible for us to concede our apposition to a Measure which we consider to be diametrically opposed to the national interest, a Measure which we consider very ill-timed at a moment of grave economic crisis, which is going, at best, to interrupt and dislocate the progress of a key industry and, at worst, to impose that industrial and administrative arthritis that always attends the setting up of one of these public monopolies. This monopoly would probably cover a far wider field than any other nationalisation Measure which has so far been put upon the Statute Book or is in prospect.

If, therefore, we concede that the Government cannot be expected to abandon the principle of nationalisation, we shall surely not be expected to abandon our principle. This is something of a test case. Situations of this kind are likely to be frequent during the life of this Parliament whether it is short or long, and it is not a bad thing that this particular case should be the first we have to consider in present circumstances, because in the Iron and Steel Act we have by chance a Measure which appears to me to be so framed as to lend itself readily to that accommodation between the parties which might be appropriate in the present state of our public affairs.

I repeat, we seek some assurance from the Government that the vesting date will not be put earlier than nine months after the next General Election. I do not think it is an unfair question to ask, why these two Sections, which I have read out, are so permissive in character and have so little mandatory force, if it were not to meet some such situation as that which now confronts us. Why are not the appointed days all laid down specifically, and why are these two Sections so permissive in character? It almost seems as if those who drafted the Section had expected and anticipated just such a situation as appears in the House today.

We cannot tell whether the course of public business and the attitude of the Government, or the events over which they have no control, or which they may be unable to foresee, particularly in the foreign field, will lead to a longer or shorter tenure of power by this Government. We do not know whether they are going to last till 1st October, 1950, or 1st January, 1951, or for that matter beyond March, 1950. What more natural than to use the delaying powers which already exist under the Act until a time when we can see more clearly? One thing is certain: If the life of this Parliament is short and a General Election takes place before the autumn, His Majesty's Government will have given nothing away at all by acceding to our request to delay the vesting date until nine months beyond the next General Election.

Of course, if the Government wish to continue in power and are able to last longer or are allowed to or the public interest appears to all sides of the House to require them to continue admittedly they would be causing a delay in the operation of this Bill. But surely that is exactly the kind of balance which we all desire. It is at least clear that this Government's tenure of office depends upon keeping away from controversial legislation. [HON. MEMBERS: "Why?"] I will tell hon. Members in one minute —because they have not got a sufficient majority to engage in controversial legislation. If hon. Members opposite who interrupt me want any proof of that, I would strongly recommend them to read the Gracious Speech, which says exactly what I have been saying, if not in so many words at least in so many omissions. It is perfectly clear that that Speech has cut down legislation almost beyond the point of being non-controversial to the point of being pedestrian.

All our Amendment seeks to do is to defer this Measure that is on the Statute Book until a newly-elected Government is entrusted either with the task of repealing the Measure, tearing it up, or putting it into full vigour and operation. That disposes of my argument on the first reason why we are moving this Amendment.

I want to turn to the second point, namely, the reasons why this deferment is necessary for the iron and steel industry itself. I must go back to some past history. I know from many sources that the leaders of the steel industry determined at the time when the Bill was in the course of passage through this House that they would regard first of all 1st May, the original vesting date, and subsequently 1st January, 1951, as so remote that they could be ignored, and they have so far pressed on without interruption with their plans and with all measures designed to secure a higher production. It was indeed fortunate for the country that they did so. Everyone in this House knows the record outputs that have been progressively obtained.

The industry itself in February, 1950, produced steel at the annual rate of 16,890,000 tons per annum. That is the February figure multiplied by the necessary number of weeks and fractions to represent an annual output. If we take the January and February production figure as being more reliable because it is a slightly longer period, the equivalent annual rate would work out at 16,375,000 tons compared with 15,589,000 tons in 1949 and 14,819,000 tons in 1948. Comparisons with 1947 are vitiated by the fuel crisis of that year, but it is worthy of remark that during the three years 1947, 1948 and 1949 the Government set the steel industry a target between a minimum of 41,750,000 tons and 42,500,000 tons. The industry had actually produced 43,150,000 tons in spite of the fuel crisis in that period. In other words, they have exceeded the targets set to them during those three years by no less than 650,000 tons.

These figures are a great tribute to the workers in the industry. They have set a splendid example to the whole nation. If I may add a personal remark, I would say that they have gone some way towards fulfilling what I consider an industrial ideal, which is a high wage, high production country, and not a frozen wage, low production country. These figures are also a tribute to the skill of the management and of the directors who have formulated the policy, progressed it and placed it through all the difficulties which exist during a period of reconstruction and expanding production. I hand freely to hon. Members opposite, if they wish to make use of it, the argument that the record output has been achieved by the industry under threat of nationalisation. But that threat up to now has been very vague and a great many have entertained the hope that nationalisation would never take place.

That is now past. The imminence of the threat grows nearer. The menace once vague has become clear and insistent. In fact, the menace is contained in a statute. As the beginning of October approaches and then the beginning of January. it will be increasingly difficult for the industry to carry on upon the notional assumption that nothing is going to happen on 1st January. In some cases interruption, and in other cases paralysis, will supervene.

I would remind hon. Members, who apparently have forgotten it, that most severe penalties are laid upon directors for having taken action which subsequently turns out to have been to the financial disadvantage of companies which they now direct. I wish to be quite fair. I say straight away that they can avoid those possible penalties by obtaining the approval of the Minister of Supply to all that they propose to do in major fields of policy. I am not making any attack upon the Minister of Supply, but all those who have dealt with Government Departments will be aware that here is another reason why it will be quite impossible to get that lively and vigorous action which is necessary, or to carry on further development and attain still higher production.

I have dealt with the advantages which, I suggest, such a delay will give to the House of Commons and to the Government, as my first point, and with the advantages to the iron and steel industry, as the second point. I now want to turn to the advantages which would be gained in setting up the Corporation itself. Here I need not use any argument of my own. I can make my case entirely upon Ministers' statements. I need only go to the shop and find a suit which readily fits, in other words an argument which fits the situation perfectly. The argument is contained in a statement by the Minister of Supply, who, we are glad to see, has not only survived the Election but also the purge. During the course of the General Election I was able to deny indignantly the rumour which was current that the right hon. Gentleman was destined for the War Office. The right hon. Gentleman has survived the Election, the purge and the War Office, and therefore his words have all the more weight. This is what he said on 16th November, 1949: There is one further matter I should like to add. We are bound to have an Election by the middle of next year, and in an atmosphere of political tension and uncertainty it would plainly be unwise to proceed now with the selection of individuals to serve on the Corporation. Men who may well be best suited for this responsible task might understandably "— I thank him for that word "understandably"— be reluctant to commit themselves to accepting such a position, and throw up their present jobs, as long as they think there is a possibility, however remote, that the Corporation may not, after all, be established." —[OFFICIAL REPORT, 16th November, 1949; Vol. 469, c. 2046.] I must say quite frankly that the greater part of that statement by the right hon. Gentleman reads like a speech made by a man upon whom the true mantle of prophecy has descended. He referred to the unwisdom of appointing men in an atmosphere of political uncertainty. May I ask whether we have not an atmosphere of political uncertainty at this moment? The right hon. Gentleman said, in the rounded phrases of the Civil Service, that men who might be well suited for this responsible task might understandably be reluctant to commit themselves as long as they thought there was a possibility, however remote, that the Corporation might not be established. Surely today there is a possibility, and not at all a remote one, that the Corporation may never be established. At any rate, the possibility is becoming far less remote than when the right hon. Gentleman employed these very cogent words—a very Solomon come to judgment. This is the true mantle of the prophet.

It is only when we read the last sentence that we realise why prophets are so often without honour in their own country. The Minister has presupposed —one can only dimly speculate whether it could have been upon the advice of Mr. Morgan Phillips—that a calmer atmosphere would follow the election of this new Parliament. In his statement of 16th November last year, the right hon. Gentleman has supplied me out of his own mouth with a very forcible argument, on which I could not improve, which adds point to and reinforces the object of our Amendment. His argument underlines the necessity for having an operative date out- side the area of political tension. I suppose we should all agree, if we are sincere, that that period can only take place after the next General Election.

I conclude by suggesting, in no contentious spirit, that it would be folly for the Government to tell the House of Commons in the present circumstances, that the nationalisation of steel is to take place at the earliest date possible under the Act. It might not appear so to hon. Members opposite, but such a statement or such an action would be the first step to the Government's committing political hari-kari on the steps of St. Stephen's. On this side of the House we are not necessarily asking that the vesting should take place at the latest date possible under the Act. In all probability we are asking for less than the full period of latitude already allowed and less than the full amount of elbow room under the Act.

We have heard very often in the course of this Debate phrases like "The King's Government must be carried on." Some of us may remember that Tom Paine said that Government in its best state is a necessary evil, and in its worst state is an intolerable one. Be that as it may, the Government cannot be carried on in the present Parliamentary circumstances without considerable tenderness being shown to opposing points of view and without a good deal of give and take. If I judged the temper of the Prime Minister's statement on Monday aright, it was that, at least for some time, the Government intend to continue in power, if it is allowed to do so. My right hon. Friend the Member for Warwick and Leamington (Mr. Eden) said on the first day of this Debate: There would be no excuse for indulging in factious or fractious opposition and we have no intention of doing anything of the kind."—[OFFICIAL REPORT, 6th March, 1950; Vol. 472, c. 50.] If we cannot expect the Government to abandon its principles we can at least ask them to delay their application. Indeed, if they were not willing to do so on this occasion, when all the legislative powers are there and no new legislation or retraction is necessary, I suggest that it would cast grave doubts upon their good faith. The Gracious Speech would then have a very different emphasis from the one which appears on the surface. I can hardly believe that what that Speech really intended to tell us was this: "We will defer until after the next General Election Measures for nationalising cement, sugar, and chemicals, and the mutualisation of insurance, provided always that we can hold power for long enough to secure by far the most contentious of all Measures, since it is by far the most comprehensive, namely the nationalisation of iron and steel."

I believed the Government, when they said that they wished to carry on during this grave situation in world affairs on a modest foundation. I believed them when they said that they would not try to divide the two parties, unless it was upon vital matters where the honesty and integrity of our political convictions, whether they be Conservative or Socialist, were at stake. I shall begin to disbelieve those protestations if, with all the necessary machinery in their hands, the Government insist upon trying to put this Iron and Steel Act into operation before another General Election. Here, in fact, appears a clear test case of the Government's intentions, the touchstone of the Government's sincerity. So far from losing face in giving the assurances for which we ask, they will give evidence that they have grasped the realities of today and have begun, perhaps for the first time, to live up to the level of events.